What changed in this filing

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Item 1. Financial Statements

2023-08-03 compared with 2023-05-04 · 127 added, 89 removed, 352 unchanged (38% of the section changed)

26 unchanged sentences

Common stock, $ 0.00001 par value, 90,000,000 shares authorized;

51,440,503 and 49,339,252 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

57,494,185 and 49,339,252 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

License and collaboration revenue

5 unchanged sentences

Interest income

Other (expense) income, net

Other expense, net

Net loss per share, basic and diluted

4 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Other comprehensive loss:

Gain on translation of foreign operations

Unrealized gain (loss) on marketable securities

(Loss) gain on translation of foreign operations

Unrealized loss on marketable securities

Comprehensive loss

5 unchanged sentences

Stockholders’

Three months ended March 31, 2023

Three months ended June 30, 2023

Balance at March 31, 2023

Issuance of common stock pursuant to public offering, net of issuance costs

Issuance of common stock under equity incentive and employee stock purchase plans

Shares withheld for net settlement of tax withholding upon vesting of restricted stock units

Stock-based compensation expense

Other comprehensive loss

Balance at June 30, 2023

Comprehensive

Stockholders’

Three months ended June 30, 2022

Balance at March 31, 2022

Issuance of common stock under equity incentive and employee stock purchase plans

Stock-based compensation expense

Issuance costs related to prior period common stock offering

Other comprehensive loss

Balance at June 30, 2022

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PROTAGONIST THERAPEUTICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(In thousands, except share data)

Comprehensive

Stockholders’

Six months ended June 30, 2023

Balance at December 31, 2022

Issuance of common stock pursuant to public offering, net of issuance costs

Issuance of common stock pursuant to at-the-market offering, net of issuance costs

3 unchanged sentences

Other comprehensive gain

Balance at March 31, 2023

Balance at June 30, 2023

Comprehensive

Stockholders’

Three months ended March 31, 2022

Six months ended June 30, 2022

Balance at December 31, 2021

3 unchanged sentences

Stock-based compensation expense

Issuance costs related to prior period common stock offering

Other comprehensive loss

Balance at March 31, 2022

Balance at June 30, 2022

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended

Cash Flows from Operating Activities

16 unchanged sentences

Purchases of property and equipment

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash Flows from Financing Activities

Proceeds from public offering of common stock, net of issuance costs

Proceeds from at-the-market offering, net of issuance costs

1 unchanged sentence

Tax withholding payments related to net settlement of restricted stock units

Issuance costs related to prior period common stock offering

Net cash provided by financing activities

12 unchanged sentences

(the “Company”) is headquartered in Newark, California.

The Company is a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly known as PN-235) in different stages of clinical development, all derived from the Company’s proprietary technology platform.

The Company is a biopharmaceutical company with peptide-based new chemical entities rusfertide and JNJ-2113 (formerly PN-235) in different stages of clinical development, both derived from the Company’s proprietary technology platform.

The Company’s clinical programs fall into two broad categories of diseases;

4 unchanged sentences

The Company’s Chief Executive Officer reviews financial information on an aggregate basis for the purposes of allocating and evaluating financial performance.

As of March 31, 2023, the Company had cash, cash equivalents and marketable securities of $ 230.8 million.

The Company has incurred net losses from operations since inception and had an accumulated deficit of $ 570.5 million as of March 31, 2023.

As of June 30, 2023, the Company had cash, cash equivalents and marketable securities of $ 313.4 million.

The Company has incurred net losses from operations since inception and had an accumulated deficit of $ 608.9 million as of June 30, 2023.

The Company’s ultimate success depends upon the outcome of its research and development and collaboration activities.

2 unchanged sentences

Risks and Uncertainties

The Company is subject to risks and uncertainties as a result of the prolonged nature of the COVID-19 pandemic and emergent variants with increased transmissibility, even in those who are fully vaccinated.

The future impact on the Company’s activities will depend on a number of factors, including, but not limited to, the scope and magnitude of any resurgences in the outbreak and the spread of COVID-19 variants, the timing, extent, effectiveness and durability of COVID-19 vaccine programs or other treatments;

and new travel and other restrictions and public health measures.

The Company has experienced delays in its existing and planned clinical trials due to worldwide impacts related to the pandemic.

The Company’s future results of operations and liquidity could be adversely impacted by further delays in existing and planned clinical trials, continued difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities, supply chain disruptions, and the ongoing impact on its operating activities and employees.

In addition, a recession or market correction related to or amplified by COVID-19 could materially affect the Company’s business.

The Company is currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by domestic and global monetary and fiscal policy, geopolitical instability, including the ongoing military conflict between Russia and Ukraine and the rising tensions between China and Taiwan, a recessionary environment, historically high domestic and global inflation and recent failures of banking and other financial institutions.

In particular, the conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices, as well as supply chain interruptions, and has contributed to record inflation globally.

The Company is currently operating in a period of economic uncertainty and capital markets disruption, which has been impacted by the COVID-19 pandemic, domestic and global monetary and fiscal policy, geopolitical instability, including the ongoing military conflict between Russia and Ukraine and rising tensions between China and Taiwan, a recessionary environment, historically high domestic and global inflation and of failures of banking and other financial institutions.

The Company has experienced delays in its existing and planned clinical trials due to worldwide impacts related to the COVID-19 pandemic, and its future results of operations and liquidity could be adversely impacted by outbreaks of disease, epidemics and pandemics, including further delays in existing and planned clinical trials, difficulty in recruiting patients for these clinical trials, delays in manufacturing and collaboration activities and supply chain disruptions.

The conflict in Ukraine has exacerbated market disruptions, including significant volatility in commodity prices as well as supply chain interruptions, and has contributed to record inflation globally.

Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time.

Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs and transportation costs may adversely affect the Company’s operating results.

In addition, the failure of Silicon Valley Bank and other regional banks in the United States between March and May of 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by the Federal Deposit Insurance Corporation.

The Company continues to monitor these events and the potential impact on its

Although the Company does not believe that inflation has had a material impact on its financial position or results of operations to date, it may be adversely affected in the future due to global monetary and fiscal policy, macroeconomic factors, supply chain constraints, consequences associated with COVID-19 and the ongoing conflict between Russia and Ukraine and other factors, and such factors may lead to increases in the cost of manufacturing for and initiation of studies in the Company’s product candidates.

In addition, the failure of Silicon Valley Bank and other regional banks in the United States during the first half of 2023 has given rise to uncertainty in the security of amounts in deposit accounts uninsured by the Federal Deposit Insurance Corporation.

The Company continues to monitor these events and the potential impact on its business.

Although the Company does not believe that inflation has had a material impact on its financial position or results of operations to date, it may be adversely affected in the future due to global monetary and fiscal policy, macroeconomic factors, supply chain constraints, the ongoing conflict between Russia and Ukraine and other factors, and such factors may lead to increases in the cost of manufacturing for and initiation of studies in the Company’s product candidates.

Summary of Significant Accounting Policies

1 unchanged sentence

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the condensed consolidated balance sheet as of March 31, 2023 has been derived from the Company’s unaudited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements.

As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP have been condensed or omitted, and accordingly the condensed consolidated balance sheet as of June 30, 2023 has been derived from the Company’s unaudited consolidated financial statements at that date but does not include all of the information required by GAAP for complete consolidated financial statements.

These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring adjustments) that are necessary for a fair presentation of the Company’s condensed consolidated financial statements.

The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future period.

The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future period.

Effective January 1, 2023, the financial statements of Protagonist Australia use the U.S.

dollar as the functional currency, which reflects the expected nature of the ongoing operations of this subsidiary.

dollar as the functional currency due to the expected nature of the ongoing operations of this subsidiary.

The cumulative translation adjustment as of January 1, 2023 related to this subsidiary was not material.

9 unchanged sentences

Estimates related to revenue recognition include actual costs incurred versus total estimated costs of the Company’s deliverables to determine percentage of completion in addition to the application and estimates of potential revenue constraints in the determination of the transaction price under its license and collaboration agreements.

Management bases these estimates on historical and anticipated results,

trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events.

Management bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to forecasted amounts and future events.

Actual results could differ materially from these estimates.

Due to the prolonged nature of the COVID-19 pandemic, military conflict between Ukraine and Russia, rising tensions between China and Taiwan and inflationary pressures, there has been uncertainty and disruption in the global economy and financial markets.

There has been uncertainty and disruption in the global economy and financial markets due to a number of factors, including the COVID-19 pandemic, geopolitical instability, inflationary pressures and domestic and global monetary and fiscal policy.

The Company has taken into consideration any known impacts in its accounting estimates to date and is not aware of any additional specific events or circumstances that would require any additional updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the issuance of this report.

15 unchanged sentences

Significant Accounting Policies

Other than the change in Protagonist Australia functional currency from Australian dollar to U.S.

dollar effective January 1, 2023 and the investment impairment policy, as discussed above, there have been no material changes to the Company’s significant accounting policies during the three months ended March 31, 2023 as compared to those disclosed in Note 2.

Other than the change in Protagonist Australia functional currency from the Australian dollar to the U.S.

dollar effective January 1, 2023 and the investment impairment policy, as discussed above, there have been no material changes to the Company’s significant accounting policies during the three and six months ended June 30, 2023 as compared to those disclosed in Note 2.

Summary of Significant Accounting Policies included in our Annual Report on Form 10-K for the year ended December 31, 2022.

1 unchanged sentence

In June 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326) (“ASU 2016-13”).

The guidance requires measurement and recognition of expected credit losses for financial assets at the time financial assets are initially

recognized in the financial statements.

The guidance requires measurement and recognition of expected credit losses for financial assets at the time financial assets are initially recognized in the financial statements.

The measurement of expected credit losses is based on historical credit loss information as well as current and future economic factors.

14 unchanged sentences

The Restated Agreement relates to the development, manufacture and commercialization of oral IL-23 receptor antagonist drug candidates.

The candidates nominated for initial development pursuant to the Restated Agreement included PTG-200 (JNJ-67864238), PN-232 (JNJ-75105186) and JNJ-2113 (JNJ-77242113) (formerly known as PN-235).

The candidates nominated for initial development pursuant to the Restated Agreement included PTG-200 (JNJ-67864238), PN-232 (JNJ-75105186) and JNJ-2113 (JNJ-77242113) (formerly PN-235).

PTG-200 is an oral IL-23 receptor antagonist that was in Phase 2a development for the treatment of Crohn’s disease (“CD”).

During the fourth quarter of 2021, following a pre-specified interim analysis criteria, a portfolio decision was made by Janssen to stop further development of both PTG-200 and PN-232 in favor of advancing JNJ-2113, based on its superior potency and overall pharmacokinetic and pharmacodynamic profile.

Janssen is primarily responsible for the conduct of all future trials, including these anticipated Phase 2 trials, and the Company is primarily responsible for the conduct of the second-generation Phase 1 trials.

Janssen is primarily responsible for the conduct of all future trials, including anticipated Phase 2 and Phase 3 trials, and the Company is primarily responsible for the conduct of the second-generation Phase 1 trials.

The Restated Agreement enables Janssen to develop collaboration compounds for multiple indications.

1 unchanged sentence

Upcoming potential development milestones for second-generation compounds include:

● $ 10.0 million upon the dosing of the third patient in the first Phase 2 clinical trial for any second-generation compound for a second indication (i.e., an indication different than the indication which triggered the $ 25.0 million milestone received during the second quarter of 2022 described above);

● $ 50.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for any indication;

● $ 15.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for a second indication;

● $ 115.0 million upon a Phase 3 clinical trial for a second-generation compound for any indication meeting its primary clinical endpoint;

Pursuant to the Restated Agreement, the Company remains eligible to receive tiered royalties on net product sales at percentages ranging from mid-single digits to ten percent.

● $ 35.0 million upon the filing of a New Drug Application (“NDA”) for a second-generation compound with the U.S.

Food and Drug Administration (the “FDA”);

● $ 50.0 million upon FDA approval of an NDA for a second-generation compound;

● $ 15.0 million upon the dosing of the third patient in a Phase 3 clinical trial for a second-generation compound for a second indication.

Pursuant to the Restated Agreement, the Company remains eligible to receive tiered royalties on net product sales at percentages ranging from six percent to ten percent.

The sales milestone payments in the Original Agreement also remain the same in the Restated Agreement.

9 unchanged sentences

The Restated Agreement contains a single performance obligation for the development license;

Phase 1 development services for PTG-200, PN-232 and JNJ-2113 (formerly known as PN-235);

Phase 1 development services for PTG-200, PN-232 and JNJ-2113 (formerly PN-235);

the Company’s services associated with Phase 2a development for PTG-200 in CD;

3 unchanged sentences

The contract duration is defined as the period in which parties to the contract have present enforceable rights and obligations.

For revenue recognition purposes, the duration of the Restated Agreement for the identified single initial performance obligations began on the Original Agreement effective date of July 13, 2017 and ended upon the completion of Phase 1 clinical trials for PN-232 and JNJ-2113.

For revenue recognition purposes, the duration of the Restated Agreement for the identified single initial performance obligation began on the Original Agreement’s effective date of July 13, 2017 and ended upon the completion of Phase 1 clinical trials for PN-232 and JNJ-2113.

Final activities related to these trials were completed as of June 30, 2022.

The transaction price of the initial performance obligation under the Restated Agreement was $ 131.7 million as of June 30, 2022, and increase of $ 0.2 million from the transaction price of $ 131.5 million as of March 31, 2022.

The transaction price of the initial performance obligation under the Restated Agreement was $ 131.7 million as of June 30, 2022, an increase of $ 0.2 million from the transaction price of $ 131.5 million as of March 31, 2022.

In order to determine the transaction price, the Company evaluated all payments to be received during the duration of the contract, net of development costs reimbursement expected to be payable to Janssen.

3 unchanged sentences

Revenue for these additional services was recognized as these services were performed.

No license and collaboration revenue was recognized for the three months ended March 31, 2023 because the Company completed its performance obligation under the collaboration as of June 30, 2022.

For the three months ended March 31, 2022, the Company recognized license and collaboration revenue of $ 25.7 million.

License and collaboration revenue for the three months ended March 31, 2022 was primarily related to the transaction price under the Restated Agreement recognized based on proportional performance.

No license and collaboration revenue was recognized for the three and six months ended June 30, 2023 because the Company completed its performance obligation under the collaboration as of June 30, 2022.

For the three and six months ended June 30, 2022, the Company recognized license and collaboration revenue of $ 0.9 million and

$ 26.6 million, respectively.

License and collaboration revenue for the three and six months ended June 30, 2022 was primarily related to the transaction price recognized under the Restated Agreement based on proportional performance.

The following tables present changes in the Company’s contract assets and liabilities during the periods presented (in thousands):

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Contract assets:

2 unchanged sentences

Payable to collaboration partner

Three Months Ended March 31, 2022

Six Months Ended June 30, 2022

Contract assets:

3 unchanged sentences

Payable to collaboration partner

During the three months ended March 31, 2023 and 2022, the Company recognized revenue of zero and $ 13,000 , respectively, from amounts included in the deferred revenue contract liability balance at the beginning of each period.

During the three and six months ended June 30, 2022, the Company recognized revenue of $ 0.9 million from amounts included in the deferred revenue contract liability balance at the beginning of each period.

None of the costs to obtain or fulfill the contract were capitalized.

10 unchanged sentences

The following tables present the fair value of the Company’s financial assets determined using the inputs defined above (in thousands):

March 31, 2023

June 30, 2023

Money market funds

9 unchanged sentences

Total financial assets

The Company’s commercial paper, corporate debt securities, U.S.

The Company’s commercial paper, corporate debt securities, and U.S.

Treasury and agency securities, including U.S.

3 unchanged sentences

Cash equivalents and marketable securities consisted of the following (in thousands):

March 31, 2023

June 30, 2023

Gross Unrealized

19 unchanged sentences

Total cash equivalents and marketable securities

Marketable securities of $ 103.1 million and $ 111.6 million held at March 31, 2023 and December 31, 2022, respectively, had contractual maturities of less than one year .

Marketable securities of $ 78.0 million and $ 111.6 million held at June 30, 2023 and December 31, 2022, respectively, had contractual maturities of less than one year .

The Company does not intend to sell its securities that are in an unrealized loss position, and it is not more likely than not that the Company will be required to sell its securities before recovery of their amortized cost basis, which may be at maturity.

There were no realized gains or realized losses on marketable securities for the periods presented.

The Company evaluated securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors and determined that there were no credit-related losses to be recognized as of March 31, 2023.

There were no material realized gains or realized losses on marketable securities for the periods presented.

Balance Sheet Components

22 unchanged sentences

Stockholders’ Equity

In August 2022, the Company entered into an Open Market Sale Agreement SM (the “Sales Agreement”), pursuant to which the Company could offer and sell up to $ 100.0 million of shares of common stock from time to time in the “at-the-market” offerings (the “2022 ATM Facility”).

As of and for the three months ended March 31, 2023, the Company sold 1,749,199 shares of its common stock under the 2022 ATM Facility for net proceeds of $ 24.3 million, after deducting issuance costs.

In November 2019, the Company entered into an Open Market Sale Agreement SM (the “Prior Sales Agreement”), pursuant to which the Company could offer and sell up to $ 75.0 million of shares of common stock from time to time in the “at-the-market” offerings (the “2019 ATM Facility”).

In April 2023, the Company completed an underwritten public offering of 5,000,000 shares of its common stock at a public offering price of $ 20.00 per share and issued an additional 750,000 shares of common stock at a price of $ 20.00 per share following the underwriters’ exercise of their option to purchase additional shares.

Net proceeds, after deducting underwriting commissions and offering costs paid by the Company, were approximately $ 107.8 million.

In August 2022, the Company entered into an Open Market Sale Agreement SM (the “Sales Agreement”), pursuant to which the Company may offer and sell up to $ 100.0 million of shares of common stock from time to time in “at-the-market” offerings (the “2022 ATM Facility”).

There were no sales of the Company’s common stock under the 2022 ATM Facility during the year ended December 31, 2022.

During the three months ended March 31, 2023, the Company sold 1,749,199 shares of its common stock under the 2022 ATM Facility for net proceeds of $ 24.3 million, after deducting issuance costs.

There were no sales of the Company’s common stock under the 2022 ATM Facility during the three months ended June 30, 2023.

In November 2019, the Company entered into an Open Market Sale Agreement SM (the “Prior Sales Agreement”), pursuant to which the Company could offer and sell up to $ 75.0 million of shares of common stock from time to time in “at-the-market” offerings (the “2019 ATM Facility”).

During the year ended December 31, 2022, the Company sold 422,367 shares of its common stock under the 2019 ATM Facility for net proceeds of $ 14.6 million, after deducting issuance costs.

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The common stock and warrants are classified as equity in accordance with Accounting Standards Codification Topic 480 , Distinguishing Liabilities from Equity (“ASC 480”) , and the net proceeds from the transaction were recorded as a credit to additional paid-in capital.

As of March 31, 2023, none of the Warrants have been exercised.

As of June 30, 2023, none of the Warrants have been exercised.

Equity Incentive Plan

In July 2016, the Company’s board of directors and stockholders approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”) to replace the 2007 Stock Option Plan.

The 2016 Plan is administered by the board of directors, or a committee appointed by the board of directors, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule.

Awards granted under

the 2016 Plan expire no later than ten years from the date of grant.

As of March 31, 2023, 892,905 shares were available for issuance under the 2016 Plan.

In July 2016, the Company’s Board of Directors (“the Board”) and stockholders approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”) to replace the 2007 Stock Option Plan.

The 2016 Plan is administered by the Board, or a committee appointed by the Board, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule.

Awards granted under the 2016 Plan expire no later than ten years from the date of grant.

As of June 30, 2023, 841,577 shares of common stock were available for issuance under the 2016 Plan.

Inducement Plan

In May 2018, the Company’s board of directors approved the Company’s 2018 Inducement Plan (as subsequently amended, the “2018 Inducement Plan”) is a non-stockholder approved stock plan, under which the Company awards options and restricted stock unit awards to persons that were not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company, within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

The 2018 Inducement Plan is administered by the board of directors or the Compensation Committee of the board, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule.

In May 2018, the Board approved the Company’s 2018 Inducement Plan (as subsequently amended, the “2018 Inducement Plan”), a non-stockholder approved stock plan, under which the Company awards options and restricted stock unit awards to persons that were not previously employees or directors of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company, within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

The 2018 Inducement Plan is administered by the Board or the Compensation Committee of the Board (the “Compensation Committee”), which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule.

Awards granted under the 2018 Inducement Plan expire no later than ten years from the date of grant.

As of March 31, 2023, 574,772 shares were available for issuance under the 2018 Inducement Plan.

As of June 30, 2023, 575,961 shares of common stock were available for issuance under the 2018 Inducement Plan.

Stock Options

5 unchanged sentences

Options forfeited

Balances at March 31, 2023

Options exercisable – March 31, 2023

Options vested and expected to vest – March 31, 2023

(1) The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on March 31, 2023.

The calculation excludes options with an exercise price higher than the closing price of the Company’s common stock on March 31, 2023.

The estimated weighted-average grant-date fair value of common stock underlying options granted to employees during the three months ended March 31, 2023 was $ 10.05 per share.

Balances at June 30, 2023

Options exercisable – June 30, 2023

Options vested and expected to vest – June 30, 2023

(1) The aggregate intrinsic values were calculated as the difference between the exercise price of the options and the closing price of the Company’s common stock on June 30, 2023.

The calculation excludes options with an exercise price higher than the closing price of the Company’s common stock on June 30, 2023.

The estimated weighted-average grant-date fair value of common stock underlying options granted to employees during the six months ended June 30, 2023 was $ 10.40 per share.

Stock Options Valuation Assumptions

The fair value of employee stock option awards was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Expected term (in years)

2 unchanged sentences

96.3 % - 99.9 %

106.2 % - 107.5 %

96.3 % - 99.9 %

Risk-free interest rate

1 unchanged sentence

2.71 % - 2.93 %

3.57 % - 4.04 %

1.64 % - 2.93 %

Dividend yield

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Unvested RSUs at December 31, 2022

Unvested RSUs at March 31, 2023

Unvested RSUs at June 30, 2023

Performance Stock Units

As of March 31, 2023 and December 31, 2022, 199,500 unvested performance stock units (“PSUs”) were outstanding under the Company’s equity incentive plans, with a weighted average grant date fair value of $ 14.59 per share.

The terms of the unvested PSUs provide for 100 % of shares to be earned based on the achievement of certain pre-determined performance objectives, subject to the participant’s continued employment.

The PSUs will vest, if at all, upon certification by the compensation committee of the Board of Directors of the actual achievement of the related performance objectives, subject to specified change of control exceptions.

Performance stock unit (“PSU”) activity under the Company’s equity incentive plans is set forth below:

Unvested PSUs at December 31, 2022

Unvested PSUs at June 30, 2023

The terms of the PSUs provide for 100 % of shares to be earned based on the achievement of certain pre-determined performance objectives, subject to the participant’s continued employment.

The PSUs will vest, if at all, upon certification by the Compensation Committee of the actual achievement of the related performance objectives, subject to specified change of control exceptions.

Stock-based compensation expense associated with PSUs is based on the fair value of the Company’s common stock on the grant date, which equals the closing price of the Company’s common stock on the grant date.

The Company recognizes compensation expense over the vesting period of the awards that are ultimately expected to vest when the achievement of the related performance objectives becomes probable.

The total grant date fair value of unvested PSUs outstanding as of March 31, 2023 was $ 2.9 million.

As of March 31, 2023, the achievement of the related performance objectives was deemed not probable and, accordingly, no stock-based compensation for the PSUs has been recognized as expense as of March 31, 2023.

During the three and six months ended June 30, 2023, the Compensation Committee certified the actual achievement of performance objectives related to certain PSUs.

As a result, recipients earned a total of 114,000 shares of common stock.

The total fair market value of PSUs on vest date during the three and six months ended June 30, 2023 was $ 3.0 million.

The total grant date fair value of unvested PSUs outstanding as of June 30, 2023 was $ 2.0 million.

As of June 30, 2023, the achievement of the related performance objectives was deemed not probable and, accordingly, no stock-based compensation for unvested PSUs has been recognized as expense as of June 30, 2023.

Employee Stock Purchase Plan

1 unchanged sentence

At the end of each offering period, eligible employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock at the beginning of the offering period or at the end of each applicable purchase period.

During the three months ended March 31, 2023, a total of 68,605 shares of common stock were issued under the 2016 ESPP, and 1,486,685 shares of common stock remained available for issuance as of March 31, 2023.

During the six months ended June 30, 2023, a total of 68,605 shares of common stock were issued under the 2016 ESPP, and 1,486,685 shares of common stock remained available for issuance as of June 30, 2023.

Stock-Based Compensation

Total stock-based compensation expense was as follows (in thousands):

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Research and development

1 unchanged sentence

Total stock-based compensation expense

As of March 31, 2023, total unrecognized stock-based compensation expense was approximately $ 66.8 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

As of June 30, 2023, total unrecognized stock-based compensation expense was approximately $ 60.7 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

Net Loss per Share

As the Company had net losses for the three months ended March 31, 2023 and 2022, all potential weighted average dilutive common shares were determined to be anti-dilutive.

As the Company had net losses for the three and six months ended June 30, 2023 and 2022, all potential weighted average dilutive common shares were determined to be anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data):

Three Months Ended March 31,

Three Months Ended

Six Months Ended

Weighted-average shares used to compute net loss per common share, basic and diluted

5 unchanged sentences

Performance stock units

Subsequent Event

Net proceeds, after deducting underwriting commissions and offering costs paid by the Company, were approximately $ 107.7 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements